Why Splitit and these ASX shares just hit new highs

Here's why Splitit Ltd (ASX:SPT) and these ASX shares are hitting new highs and why I would be very careful with one of them…

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Although the Australian share market came under pressure on Friday, it didn't stop a number of shares from climbing to new highs.

Three ASX shares that hit new multi-year highs or better are listed below. Here's why they are flying high:

Catapult Group International Ltd (ASX: CAT)

The Catapult share price climbed to a multi-year high of $2.32 on Friday. Investors have been buying this sports analytics and wearables company's shares following the recent release of a strong FY 2020 result. Catapult reported a 6% increase in revenue to $100.7 million, thanks to an impressive 21% lift in its subscription revenue to $77.6 million. Things were even better for its operating earnings. Catapult delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of $13.3 million in FY 2020. This was an improvement of $9.2 million and driven by the continued strong subscription revenue growth and a decline in operating expenses. Looking ahead, management continues to expect the company to be cash flow positive in FY 2021.

Marley Spoon AG (ASX: MMM)

The Marley Spoon share price continued its meteoric rise and reached a record of $3.80 at the end of last week. The catalyst for this was the global subscription-based meal kit provider's half year results. Thanks to the rapid adoption of its offering during the pandemic, Marley Spoon delivered an 89% increase in half year revenue to 116.2 million euros. This led to management upgrading its guidance for the full year to 80% to 100% revenue growth. Another positive was that this strong form means Marley Spoon is now cash flow positive.

Splitit Ltd (ASX: SPT)

The Splitit share price hit a record high of $1.92 on Friday. Investors have been buying the buy now pay later provider's shares amid increased investor interest in the industry. This means Splitit is now valued over $700 million, despite generating only US$2.4 million of revenue in the second quarter of FY 2020. This looks very excessive to me, especially given its unusual focus. Most buy now pay later companies are leveraging the dislike for credit cards that younger consumers have. Yet Splitit is a payment method solution that allows customers to pay for purchases with an existing credit card by splitting the cost into interest and fee free monthly payments. I feel this gives it a far more limited market opportunity, not least given the declining number of active credit cards.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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